Ukrainian grain in the conditions of war

Ukrainian grain in the conditions of war

Ukraine is a leading grain supplier

The Russian military aggression against Ukraine, which began on February 24, 2004, brought the whole world to the brink of a humanitarian catastrophe. As a result, in 2022 Ukraine is expected to reduce the agricultural harvest by 35%, which will be the lowest figure in the last 10 years.

Ukraine is the largest supplier of grain and one of the top five exporting countries for agricultural products, which are supplied to the markets of approximately 55 countries. These are the countries of the European Union, the Middle East, Asia and North Africa, and most of these states import a significant amount of agricultural products from Ukraine.

Ukraine ranks first in the world in terms of sunflower and sunflower oil exports.

Approximate harvest statistics for the last few years are as follows:

– 2018             61.9 million tons

– 2019             70 million tons

– 2020             71.7 million tons

– 2021             106.6 million tons

In 2021, about 85 million tons of grain were exported through Ukrainian ports, which is about half of the total port cargo turnover and is a record figure in recent years.

Export of grain in new conditions

After the start of the war, many Black Sea ports were blocked and Ukraine managed to export only up to 10% of the annual grain exports, and according to industry experts, about 17 million tons of last year’s crop are still in the elevators. Transportation is carried out by rail and road through Poland, Romania, Slovakia and Moldova, as well as through the ports of Izmail and Reni by water. Rail transport and road transport cannot replace sea transport.

As for the cost of transshipment of grain in the above ports, if before the start of the war it was 5-6 dollars, today it is 26 dollars per ton. The cost of the fleet has also increased many times over.

Implications for the market

The war in Ukraine led to a chain of such negative consequences:

– shortage of agricultural fertilizers and falling yields;

– decrease in the number of crops and harvest;

– increase in the cost of the logistics chain of transportation;

– increase in the cost of insurance of ships floating in the Black Sea basin;

– rise in price of fuel and lubricants:

– falling prices for agricultural products close to the verge of its profitability;

– the threat of a humanitarian crisis in the world.

Active hostilities on the line of contact made it impossible to carry out agricultural work on sowing and harvesting grain. More than 20% of agricultural lands are occupied or do not have the opportunity to carry out field work. Many approaches to the coast and the sea area remain mined.

A quarter of agricultural producers do not have the opportunity to purchase the necessary crop protection products.

In addition, the Russian Federation illegally exports Ukrainian grain from the occupied territories. The UN made a statement about the possibility of famine. The Ukrainian state treasury is losing significant revenues, but now events are developing that can correct this situation.

Creation of a green corridor

On July 22, 2022, in Istanbul, with the mediation of the UN and Turkey, an agreement was signed on the creation of a green corridor for the export of Ukrainian grain. Despite the rocket attack on the Odessa seaport less than a day after the signing of the agreement, active work is currently underway to create conditions for the implementation of this mission.

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